By Dr. Peter D. Maynard[1]
This article discusses recent developments in the attack on international financial centres (IFCs), launched by the Organization of Economic Cooperation (OECD) and affiliated organizations. It examines the protectionist, anti competition, anti globalization and hypocritical positions of those countries, the economic terrorism of the OECD, the damage to and responses of some of the IFCs, and also whether the long march back to restoring competition is feasible or has begun.
Globalization
Globalization is highly overrated. Each generation, or rather each decade, has a different buzzword for world economic integration. The cycle of the rich getting richer and the poor getting poorer has not been broken, but is probably worse. In spite of the enormous improvements in communications, a half of the world’s population has become less globalized, trade has fallen, and poverty has increased. Medicines and health services are not sufficiently globalized, and therefore AIDS and health scourges continue. Former US President Clinton at the end of 2001 stated poignantly: “… what are the burdens of the twenty-first century? They are also formidable. Global poverty – half the people on earth are not part of that new economy I talked about. Think about this when you go home tonight. Half the people on earth live on less than two dollars a day. A billion people, less than a dollar a day. A billion people go to bed hungry every night and a billion and a half people – one quarter of the people on earth – never get a clean glass of water. One woman dies every minute in childbirth. So you could say “ don’t tell me about the global economy, half the people aren’t part of it, what kind of economy leaves half the people behind?”[2]
Even for those Caribbean and Pacific IFCs which have been able to raise themselves out of poverty, when you flashback 60 years ago, they were hardly more than exotic, touristic fishing villages. Like so many countries in the postwar world, they have worked hard to pull themselves up by the bootstraps, to expand and attempt to diversify their economies. To allow the OECD to continue to destroy and reverse the economic gains of the past half century, and to return to fishing villages, are not viable options.[3] That would result in a mass emigration and brain drain from these countries to the metropolitan countries, because the reality is that financial services play an important role in their growth, development and stability.
Marginalization and Persistent Poverty
Many IFCs, especially in the developing world, are becoming less globalized and more marginalized. The terms of trade in sugar, bananas, rice, and even bauxite and other raw materials and agricultural products have continued to deteriorate. This is not new. Raul Prebisch and the UNCTAD again brought this recurrent weakness of the economic development of the South to the world’s attention many years ago. The persistent poverty and underdevelopment of plantation economies of the Third World were dramatically presented since the 1970’s by George Beckford.[4] In the OECD’s brave new world, the IFCs are damned if they are uncompetitive and protectionist (sugar, bananas, and other agricultural products and raw materials), and damned if they are competitive and non protectionist (financial services). That is the vicious cycle of persistent poverty that would be imposed by the OECD so-called “harmful tax competition” initiative.
Hence, on the eve of the new millennium, the real hope of many developing countries for development lay in services. For example, in December 1999, the then head of the Caribbean Development Bank (CDB), Sir Neville Nicholls, indicated that the future for the countries in the region depended on their ability to provide competitive services, including tourism but also financial services. This trend replicates itself in the Pacific. The former CDB head’s statement was made before the anti competition onslaught of the OECD. Since then, he has been extremely critical of the OECD initiative, indicating that harmful tax is a “bogus argument,” which is “calculated, deliberate and vicious.” The OECD position is designed to prevent OECD member nations from losing financial services business to IFCs. The primary and most fundamental consequences were to attack the competitiveness of the IFCs, to undermine and destabilize their economies, and to preserve the uncompetitiveness and economic inefficiency of their OECD competitors.[5] Likewise, other prominent spokespersons in the IFCs have also been vociferous and insightful in their criticism of the OECD initiative.[6]
In the United States and elsewhere, many like-minded interests have emerged, which not only recognize the devastating impact on developing countries, but also the adverse effect on the developed countries themselves and on globalization itself. For example, a letter to President George W. Bush from the Economics Nobel Laureate Milton Friedman among other economists states the position quite succinctly that the OECD initiative hurts growth, hinders world economic reform, and has an extremely damaging effect on the less developed countries.[7]
Some IFCs may have held their own in certain niche markets, such as trusts in the Bahamas, mutual funds in the Cayman Islands, or insurance in Bermuda. But, for how much longer? The markets for a variety of other financial products, such as international business companies (IBCs), in all but a few IFCs, have shrunken and smaller firms have gone out of business or been most seriously damaged. For example, the Hong Kong and Shanghai Banking Corporation (HSBC), instead of establishing its “offshore” headquarters in the Bahamas, Bermuda or Cayman, chose London. This may be an increasing trend, unless urgent corrective action is taken.
In respect of September 11, 2001, there is no evidence that terrorist money is held in IFCs to any significant extent. Indeed, the evidence suggests just the opposite.[8] The organizations and individuals that support terrorism are quite able to place their assets in financial institutions in the metropolitan countries, and conversely do not pass the rigors of most IFCs, which accept mainly institutional money that is already in the financial system.
The responses of the IFCs to the OECD and associated organizations have varied across a broad spectrum. Far too seldom have they acted in unison. They have still at this late stage not curbed the vigorously competitive attitudes among each other, nor sufficiently developed a critical mass of crucial and shared common interests in their own survival. Indeed, cooperation with each other and with like-minded interests in the developed economies is the key to the continued future viability of their financial sectors.
The Barbados Prime Minister set the tenor of the appropriate response. At the opening of the OECD conference on this issue in Barbados, he said, “Barbados will not subscribe to it (the OECD harmful tax competition initiative). It is a matter on which we will not yield.”[9] He also stated, “Institutions in the developed world that have no authority under any treaty, convention, agreement or legal instrument known in international law, are simply attempting to bend the course of development in countries such as ours to their will by use of crude threats and stigmas.”[10]
The mature thing to do would be to have the international court adjudicate on this economic terrorism. One does not negotiate with terrorists. The same posture applies to international economic relations, where agreements are not concluded under duress and threats of aggression and destabilization. That strong language is justified by the intensity, lawlessness, and damaging impact of the OECD led and inspired initiatives.[11] The United Nations Charter makes it quite clear that states and their agents, such as the OECD, are to refrain from the threat or use of force. Moreover, fiscal and political sovereignty is protected by international law, and is another fundamental ground rule of international relations. States determine the fiscal systems which are in their national interests. No country or economic or political grouping is permitted to dictate the tax system of another country economic or political grouping.[12]
In contrast, the Bahamas, for example, adopted a battery of 11 new pieces of legislation by December 2000, even though a sophisticated anti money laundering law had already been in effect since 1996. It is probably now the most highly regulated IFC anywhere. The new financial architecture consists of the following principal statutes: Proceeds of Crime Act, 2000 (44 of 2000);[13] Evidence (Proceedings in Other Jurisdictions) Act, 2000 (14 of 2000); Evidence (Proceedings in Other Jurisdictions) (Amendment) Act, 2000 (33 of 2000); Central Bank of The Bahamas (Amendment) Act, 2000 (37 of 2000);[14] Banks and Trust Companies Regulation (Amendment) Act, 2000 (38 of 2000);[15] .Financial Intelligence Unit Act (39 of 2000) (“FIU Act”), including the Financial Intelligence Unit (Amendment) Act 2001 (20 of 2001);[16] Financial Transactions Reporting Act, 2000 (40 of 2000) (“FTRA”), including the Financial Transactions Reporting (Amendment) Act 2001 (17 of 2001);[17] Financial and Corporate Service Providers Act, 2000 (41 of 2000) (“FCSPA”), including the Financial and Corporate Service Providers (Amendment) Act 2001 (18 of 2001);[18] Criminal Justice (International Cooperation) Act, 2000 (42 of 2000);[19] Dangerous Drugs Act 2000 (43 of 2000); and International Business Companies Act, 2000, including the International Business Companies (Amendment) Act 2001 (19 of 2001).[20]
The regulators and supervisors include: the Compliance Commission established under section 39 of the FTRA; the auditor appointed by the Compliance Commission; the Financial Intelligence Unit established under section 3 of the FIU Act; the Inspector of Banks and Trust Companies established under section 9 of the Banks and Trust Companies Regulation Act; the Inspector of Financial and Corporate Service Providers appointed under section 12 (1) of the FCSPA; the Minister of Finance; the Central Bank Governor under the Central Bank of the Bahamas Act, and the Banks and Trust Companies Regulation Act; the Securities Commission under the Securities Industry Act and the Mutual Funds Act; the Minister of Economic Development; the Registrar of Insurance, under the Insurance Act and External Insurance Act as amended; the Registrar of Companies under the International Business Companies Act, and the Companies Act; the Minister of Tourism; the Lotteries and Gaming Board under the Lotteries and Gaming Act as amended; the Minister of Health under the Dangerous Drugs Act; the Minister of National Security under the Proceeds of Crime Act; the Attorney General under the Proceeds of Crime Act, the Criminal Justice (International Cooperation) Act, the Evidence (Proceedings in Other Jurisdictions) Act, and the Mutual Legal Assistance Act as amended; and the police.
Among the most controversial of these statutes are the FIU Act, the FTRA, and the FCSPA. The FIU Act establishes an FIU, which has powers far beyond FIUs in other jurisdictions. An FIU is typically a research organization that examines suspicious transaction reports and, where necessary, advises the law enforcement of problem areas. The Bahamian FIU Act gives the FIU various law enforcement powers. It is dealt with in the case below.
The FTRA is being challenged. Indeed, an application for judicial review of the whole compendium of legislation has been made. The FTRA is modeled on the financial transactions reporting legislation of New Zealand, but is far more extreme. For example, the FTRA extraordinarily establishes a compliance commission, unlike the New Zealand act, which relies on the police and traditional law enforcement. The compliance commission has wide powers, and must conduct an annual audit of each financial institution, at that institution’s expense, to verify its compliance with the statutory record keeping and other procedures. The audit can violate attorney-client privilege. The class of persons categorized as financial institutions within the FTRA is extremely broad, including lawyers, accountants, friendly societies, real estate agents, and many other professions that would not ordinarily conceive of themselves as financial institutions.
The FCSPA provides for a licence to financial and corporate service providers. The minimum cost is 2,500 dollars. In addition, the service provider must pay for an annual examination by the Inspector. The above acts have considerably pushed up the cost of financial services and of doing business.
Lost Momentum
At the same time, OECD economic terrorism has lost its momentum, because it did not receive the support of the Bush administration, except for tax information exchange. Nevertheless, several countries scrambled to make their declarations of commitment before the expiry of the OECD’s extended deadline of February 28, 2002. The Bahamas, in a most unusual move, submitted its draft declaration in advance for the approval of the OECD, which subsequently gave the Bahamas government the nod to sign it. This declaration no doubt contained the “Isle of Man” clause, which required the OECD countries to apply to themselves first the stipulations they wish to impose on the IFCs. The idea of a level playing field was also supported in principle in the final communiqué issued by the Commonwealth heads of government meeting in Australia.
Moreover, the Bush administration has itself pressed for bilateral tax information exchange. A recent trend is the conclusion of new tax information exchange agreements (TIEAs) with the US. The US-Cayman TIEA can only be described as draconian. It even contemplates IRS tax examinations wholly by IRS personnel on Cayman soil. The Cayman Islands, like Bermuda, British Virgin Islands, the Turks and Caicos Islands and other IFCs, are still a colony of the United Kingdom. These extreme provisions are perhaps symptomatic of the manner in which the agreement was executed, namely in Washington, by the US treasury secretary, and the UK ambassador to the US, in the presence of the British governor of Cayman. The Cayman was also present. But, the agreement appears to have been very much a matter decided by the UK,which has responsibility for the foreign affairs of Cayman. The agreement no doubt may be pressed as a model for the other British territories in the Caribbean and Pacific.
Antigua-Barbuda subsequently signed a TIEA with the US. The Bahamas also signed a TIEA in Washington on January 25, 2002. Such an agreement was also being negotiated with Panama.
Regarding the impact of the TIEA, it is noted that US business makes up an increasingly smaller proportion of overall business. Many banks presently require customers to sign waivers of confidentiality allowing the banks to release information to US tax authorities if and when a request is made to them.
Moreover, regarding trusts, the TIEAs require the disclosure of beneficiaries and settlors to the requesting state. That would completely eliminate the legitimate privacy expected in the establishment of a trust, and rings the death knell of trust business in IFCs. If such disclosures have to be made, a settlor might as well simply establish the trust in the metropolitan OECD country.
Another concern is that IFC governments are under the illusion that they can limit themselves to having a TIEA only with the US and not with the other developed countries. But, IFCs cannot avoid concluding such TIEAs in due course with Canada, the European Union, and later the Latin American countries. Indeed, such exchange is a stipulation of the OECD declaration of commitment.
Capitalism or Socialism
An obvious major feature in the comparative advantage of IFCs is low taxes. This is the primary target in the capitalism-socialism ideological controversy at the root of the attack on the IFCs. The OECD effort is fueled by high-tax welfare states who fear that money will taken out of their economies and placed in low-tax free-enterprise jurisdictions such as the IFCs. This is commented on by Milton Friedman and the other co-signatories of the letter to President Bush.[21]
The added anomaly or double standard is that the socialist oriented states themselves promote facilities which function as IFCs. Indeed, London is one of the largest tax havens in the world.
The International Monetary Fund (IMF) has taken a long time to come up to speed on this issue. At a conference in early 2001, it was generally agreed that competitive advantage and the improvement of world welfare through Adam Smith’s invisible hand had as much of an application to the IFC issue as to any other sector of the world economy. However, a study prepared by the IMF was painfully out of date and perhaps disingenuous in suggesting a typology of IFCs that put those in the developing world at a considerable disadvantage. Therefore, unless some prompt corrective action is taken, it appears that misguided power politics will prevail even in that forum over economic theory and development.
Long March
Have the IFCs begun the long march back to competitive advantage? No. All the governments are still under siege. Some, especially in the Pacific, continue to oppose the terrorism of the OECD, and should be encouraged and supported. Others are on the retreat, are still in a state of shock, have capitulated except for an elusive “level playing field” and OECD deadlines a few years down the road.
To make matters worse, some IFCs try to anticipate what the OECD will require next, and impose the most extraordinary requirements. For example, it was reported that the Central Bank of the Bahamas imposed on locally owned trust companies the requirement that must have G7[22] investor partners, owning about 25 percent of the business. The rationale was that the G7 partner would already be regulated by its G7 home country, and therefore that the IFC need only be concerned about “secondary” regulation, the primary responsibility having already been undertaken in the G7 country. The implications are that a local investor is restricted to going into business with a narrow discriminatory class of persons based on nationality, that the local institution is not really capable of regulation at all, and that the smaller institutions continue to be pressured out of business. This particular regulatory directive was put in abeyance because of the protest it produced.[23] But, such measures only make make a mockery of the IFCs and would hasten their demise. Therefore, it is imperative that private persons, professionals, companies and NGOs make their influence felt in order to develop and implement the appropriate responses.
One has to reassess which features give the IFCs under attack a competitive advantage. Apart from the tax feature, discussed above, there are other features, such as asset protection, business expediency, and transfer pricing for multinational corporations. It is suggested that those factors also determine the location of business in IFCs.[24]
However, there is little doubt that low taxes and fiscal sovereignty will and must be enduring features. That is not something to apologize about. The IFCs themselves have historically been bastions of personal freedom, civil liberties, and freedom from the tyranny of governments. Moreover, the promotion of free enterprise has been at the root of the existence and survival of these countries, which avidly support world peace and the expansion of trade and investment. There is also an important difference between tax competition and money laundering. They are not the same. The OECD exploits the confusion between the two. The IFCs may be tax competitors, but, without exception, oppose money laundering.
But, there are some things even more fundamental at stake, namely justice, due process, and your right to a hearing in a court of law, and serious human rights and constitutional concerns. The IFCs, from Barbados to the Solomon Islands, have highly respected judicial systems, which are a vital feature to the promotion of world investment flows. Any investor needs to know that he will have his day in court and a fair hearing in the IFC, even against the tax authorities of his home country. It is quite a reasonable and legitimate requirement that the investor shall have access to justice wherever he may be. However, that access to justice is being considerably eroded by the OECD onslaught.
The Bahamas Court expressed its disapproval of this state of affairs in Financial Clearing v. Attorney General of the Bahamas.[25] Under the FIU Act, the FIU is empowered to issue three-day restraining orders and five-day freezing orders without the prior authorization of any court. Such orders had been issued freezing the accounts of Financial Clearing, a British Virgin Islands company, in Barclays plc Nassau. The Supreme Court of the Bahamas found that the freezing orders were an unlawful deprivation of property contrary to Article 27 of the Bahamas Constitution. The identical provision is found in other Westminster style constitutions, such as those of many Caribbean and Pacific IFCs.
Another notable recent case deals with whistle blowing and the violation of the attorney-client privilege. In British Columbia Law Society v. Attorney General of Canada (with the Canadian Bar Association intervening),[26] the British Columbia Law Society was given a temporary exemption from the regulation under the Federal Proceeds of Crime anti money laundering law requiring lawyers to report confidential information to the government. According to the Court, the regulation was an “unprecedented intrusion into the traditional solicitor-client relationship.” The “fundamental values of the Constitution” must be protected. Another case raising similar issues in Ontario is Federation of Law Societies v. Attorney General of Canada.[27]
The point is that greater cooperation is required to counteract the attack against IFCs. IFC governments need to cooperate considerably more, even though such cooperation may be contrary to their competitive instincts. It should be recognized that such competition contains the source of the destruction of IFCs. There is an intergovernmental organization of IFCs, called the International Tax and Investment Organization (ITIO), but very little appears publicly to be happening within it. It grew out of the OECD-Commonwealth Joint Working Group on Harmful Tax Competition.[28]
OCCBA Nassau Declaration
Greater cooperation is also encouraged among like-minded interests, lawyers and bar associations. Indeed, in May 2001, the Organization of Commonwealth Caribbean Bar Associations (OCCBA), consisting of the bar associations of the 17 English speaking countries of the Caribbean, unanimously adopted a resolution, called the Nassau Declaration on Financial Services, condemning the blacklisting of the IFCs as economic terrorism,[29] and called for greater cooperation to defeat the brazen attempt to abolish the economic future of so many countries.
In conclusion, there has been a rush to judgment about IFCs. The exercise has not been fundamentally about money laundering or financial crime. Instead, it has been a shocking primer in hypocrisy and economic terrorism.[30] It has been about protectionism, anti competition, anti globalization, and double standards. The OECD harmful tax competition effort has been aimed at protecting high tax jurisdictions and putting IFCs out of business.
Therefore, at this critical juncture, there is an urgent need for closer cooperation among countries, lawyers, bar associations, and other like-minded persons and non-governmental organizations. Steps should be taken to end the mindset of competing against each other, to start effectively cooperating together, and to prevent a rush to capitulation.
* ~ * ~ * ~ *
[1] This article is based on the author’s statement at the IBA South Pacific Regional Law Meeting, Fiji, 2-4 February, 2002, at which all the states of the South Pacific were represented, including all of the Pacific IFCs. Counsel and Attorney at Law, engaged in commercial law, company law, trusts, banking, and civil and criminal litigation. President of the Bahamas Bar Association and President of the Organization of Commonwealth Caribbean Bar Associations. IBA Deputy Secretary General – Caribbean. Admitted to practice law in 1979 in England, Wales and The Bahamas; and in 1986 in St. Lucia, St. Vincent and the Grenadines, Antigua and Barbuda and Trinidad and Tobago, in 1996, pro hac vice in the Turks and Caicos Islands. Education: McGill University (B.A., Hons.); Johns Hopkins University (M.A., Ph.D.); Cambridge University (LL.M.); Sorbonne (1966); Cornell University (1968); University of Toronto (1971). Member of the Hon. Society of Gray’s Inn. Former posts: Legal Adviser, Bahamas Ministry of Foreign Affairs; Economics Affairs Officer, United Nations; and Acting Stipendiary and Circuit Magistrate. Contributing Editor, Journal of Financial Crime, Journal of Money Laundering Control, Amicus Curiae, International Journal of Banking Regulation, Company Lawyer and Caribbean Law and Business. PETER D. MAYNARD & CO., Chambers, Jehovah Jireh House, Bay & Deveaux Streets, P.O. Box N-1000, Nassau, Bahamas, telephone: (242) 325-5335 , fax: (242) 325-5411, mailto:peter.maynard@maynardlaw.com
[2] Bill Clinton, “The Struggle for the Soul of the 21st Century,” Richard Dimbleby Lecture 2001. www.bbc.co.uk.
[3] In any case, to revert would cause the complete destabilization of these societies. The people would not tolerate it, and are not interested. The fish are not there, neither are the villages, the water is rising, and the islands are disappearing. “Those were the years after the ice caps had melted because of the greenhouse gases, and the oceans had risen to drown so many cities along all the shorelines of the world – Amsterdam, Venice, New York forever lost. Millions of people were displaced. Climate became chaotic. Hundreds of millions of people starved in poorer countries. Elsewhere a high degree of prosperity survived when most governments in the developed world introduced legal sanctions to strictly licence (tax) pregnancies …” Opening words of the film “Artificial Intelligence” directed by Steven Spielberg. Brackets added.
[4] George L. Beckford, Persistent Poverty: Underdevelopment in Plantation Economies of the Third World (New York: Oxford University Press, 1972).
[5] He added that the OECD countries were muscling in on their IFC competitors. The OECD attack also coincided with a slowdown in the US and in the world economy, and in falling prices for exports, all of which had a negative impact on developing country IFCs. “Development bank chief attacks ‘ridiculous’ OECD,” The Tribune newspaper, Bahamas, January 2, 2001, page 1B.
[6] For example, the opinion of Everson Hull Ph.D. (Econ) in The Democrat Newspaper of St. Kitts-Nevis of 7/1/2000: “In preparing this united response, it must be recognized that most of the countries listed have struggling economies. Many are seeking to escape an agrarian lifestyle, and seeking to diversify their economies in a way that helps them to escape a cradle to the grave life of poverty. It is troubling to note that the same G7 countries are also leaders in their call for greater diversification among developing countries.
It must be noted that at the same time that the OECD/G7 is implementing measures that will harm the diversification programs of many developing countries, each of the G7 countries has curtailed their financial aid assistance to the world. To illustrate, total flows to all aid recipients fell by 26 percent from $368 billion in 1996 to $272 billion in 1997, the last year of complete available OECD/G7 data. With declines for most G7 countries over the past five consecutive years, their assistance as a group now
represents a record low 0.19 per cent of their collective GNP.” http://democrat.freeservers.com/democrat/archives/07012000.html
[7] The letter dated May 31, 2001 is worth citing in extenso: “We, the undersigned economists, urge you to reject the Organization for Economic Cooperation and Development’s so-called “harmful tax competition” initiative. According to the OECD, it is unfair for low-tax countries to attract the jobs, capital and entrepreneurial talent away from high-tax countries. To stop this process, the Paris-based bureaucracy is threatening low-tax nations with financial protectionism unless they change their tax and privacy laws so that high-tax nations can more easily double-tax income that is saved and invested — even when that income is earned in other nations.
This is incompletely misguided initiative. Tax competition … should be celebrated rather than persecuted. It forces governments to be more fiscally responsible lest they drive economic activity to lower-tax environments. Other reasons for opposition include: a. The OECD seeks to create a tax cartel … b. The OECD is threatening global commerce – Protectionism is a bad idea, and it is a really bad idea when the goal is to interfere with international capital flows. The OECD effort is akin to a high tax state like California trying to block investment dollars from flowing to a low-tax state like Nevada. c. The OECD proposal will boost the underground economy… d. The OECD is defending bad tax policy … e. The OECD will hurt growth in less-developed nations — Penalizing countries for adopting market-friendly tax systems will hinder economic reform and reduce growth rates in the developing world. This may even cause more crime since opportunities for honest employment will shrink.”
The full text can be found on the very useful web site of the Center for Freedom and Prosperity www.freedomandprosperity.org.
[8] “In the aftermath of September 11, many policy makers assumed that terrorists were holding their money in so-called tax havens. Investigators have since discovered, however, that the terrorists relied on the banking systems of the United States, the United Kingdom, Germany, and various nations in the Middle East for the vast majority of their financial transactions.
In spite of stereotypes formed by reading John Grisham novels, tax havens do not attract a significant portion of the world’s dirty money…” Daniel J. Mitchell, “U.S. Government Agencies Confirm that Low-Tax Jurisdictions are not Money Laundering Havens,” Prosperitas, vol. II, Issue I, January 2002. Also available through the web site in note 6 supra.
[9] Nation newspaper, Barbados. See its web site. Barbados has remained the most tenacious opponent of the OECD attack, and was not required to make any declaration of commitment to the OECD objectives. While Barbados has had a double taxation treaty structure for many years, the OECD has purported to have recognized that only recently. The fact that the OECD has backed off from Barbados is viewed as an attempt to satisfy and neutralize its most vocal critic, and at the same time, remove it from the other “uncooperative” jurisdictions – in other words, another application of the old imperialist policy of divide and rule. That can be counteracted, of course, by greater unity among the IFCs and continuing cooperation with Barbados is this regard.
[10] The Tribune, Bahamas, June 6, 2000.
[11] See the condemnation below by OCCBA of the OECD harmful tax initiative as economic terrorism.
[12] See the Nassau Declaration on Financial Services at note 27 infra.
[13] Proceeds of Crime (Designated Countries and Territories) Order 2000
[14]e.g., Guidelines for Managed Banks Transition to Full Physical Presence.
[15]Banks and Trust Companies (Application) Regulations 2001, and the Banks and Trust Companies (Restriction on Use of Banking Names) Regulations.
[16]Financial Intelligence (Transactions Reporting) Regulations 2000, and Financial Intelligence Unit (Designation of Foreign Financial Intelligence Units) Order 2001.
[17]Financial Transaction Reporting Regulations 2000 (including amendments of 18/07/01), and Financial Transactions Reporting Act (Extension of Time for Verification of Identity) Order, 2001.
[18]Financial and Corporate Service Providers (Licence) Order 2001, and the Financial and Corporate Service Providers (General) Regulations 2001.
[19]Criminal Justice (International Cooperation) Regulations 2000.
[20] The legislation is discussed in detail by this author in the chapter on the Bahamas in the Butterworths Guide to International Money Laundering Law and Practice, 2002.
[21] See footnote 6 supra.
[22] G7 plus 3 other approved countries.
[23] See Samantha Joseph, “Concerned Accountants may stage OECD protest,” “Private Trust confused by Central Bank review,” “Private Trust still unclear on Central Bank’s review,” “Central Bank ask s for quiet on review,” The Tribune, Bahamas, 26 February, 6 March, 18 March, and 19 March, 2002 respectively.
[24] See, for example, the useful articles by Robert Hindle and others, appearing in Offshore Finance USA, and its associated Canadian publication.
[25] unreported, Supreme Court of the Bahamas Common Law Action No. 232 of 2001, decided on 27 November, 2001.
[26] The Law Society of BC v. AG Canada; Federation of Law Societies v. AG Canada, 2001 BCSC 1593, Date 20011120, Docket L013116, Registry Vancouver.
[27] Heard January 2 to 3, 2002, File 01-CV-222041, Date 20020109, Ontario Superior Court
[28] The members were Antigua and Barbuda, the Bahamas, Barbados, the British Virgin Islands, the Cook Islands, Dominica, Malaysia, and Vanuatu. Cordia Scott, “Low-Tax Jurisdictions Press OECD to Answer Questions on Fairness,” International Tax Online, http://www.tax.org/international/internationalf.htm#
[29] The Organization of Commonwealth Caribbean Bar Associations (OCCBA), (a) Considering that the position of the Organization for Economic Co-operation and Development (OECD) does not respect Rule of Law, sovereignty, noninterference in internal affairs, and the presumption of innocence; (b) Recognizing that money laundering should be unlinked from tax competition; (c) Believing that the policy of the Organization of Economic Co-operation and Development (OECD) is economic terrorism against international financial centres and that the fiscal sovereignty of all countries should be respect; (d) Believing that the OECD countries should apply to themselves the same rules they seek to impose upon the international financial centres and establish a level playing field; (e) Noting that as a cartel, the OECD position undermines sound business and economic principles – the principles of comparative advantage, free competition and trade in services, economic development and economic diversification – preys on the vulnerability of small countries, and promotes protectionism; (f) Suggesting that it is not in the self-interest of the countries of the North to destroy the financial sectors and economic prospects of these countries; Resolves That:
1. No country or economic or political grouping should dictate the tax system of another country economic or political grouping. 2. The international financial centres should be removed from the FATF blacklist and the policy of shaming countries should be discontinued. 3. The policy of the OECD of imposing so-called defensive measures which are in fact offensive should be discarded. 4. The OECD should desist from using the threat of blocking and excluding transactions from international financial centres from financial and securities markets and clearing and settlement systems in the United States of America and United States should treat that threat with the contempt that it deserves. 5. That OCCBA should review this matter on ongoing basis including at its special meeting in September 2001. 6. This resolution should be known as “Nassau Declaration on Financial Services”. OCCBA reaffirmed this resolution and called for greater cooperation among lawyers, other professionals and governments at its meetings in Trinidad and Tobago in September 2001, and in Belize in January 2002. This subject will also be dealt with at OCCBA St. Kitts-Nevis, September 6-7, 2002.
[30] See by this author, “The Attack on International Financial Centres: A Shocking Primer in Hypocrisy and Economic Terrorism” (forthcoming).
